Common, costly renovating mistakes

May 18, 2012

Now that spring is here, many homeowners will start home improvement or building projects indoors and out to spruce up or increase the value of their homes.

The Michigan Department of Licensing and Regulatory Affairs reminds consumers of important tips that will help them avoid common - and often costly - mistakes while building or renovating their homes.

Verify a Builder/Contractor License

"Selecting a properly licensed contractor is the first and most important step in making home improvements," said Licensing and Regulatory Affairs Director Steven H. Hilfinger. "Ask to see a copy of their license then take a few minutes to look up the license online or give us a call. Those few minutes spent at the beginning of the project may prevent big problems later."

Residential Builders and Maintenance and Alteration Contractors: An online license search is available at www.michigan.gov/licenselookup or by calling the Licensing and Regulatory Affairs's Bureau of Commercial Services Licensing Division at (517) 373-8376.

Contractors: Electricians, plumbers and mechanical contractors are licensed by LARA's Bureau of Construction Codes and must have a license that corresponds to the work to be done. Mechanical contractors must also have the proper license classification. To verify license information visit www.michigan.gov/bcclicense or call (517) 241-9313.

Online Referral

An Internet search for builders or contractors will yield service provider referral sites and advertising sites such as Craigslist. Many of the ads will state that the individual is licensed. Regardless of the source of the referral, consumers should exercise caution and not assume that these individuals are licensed or that they're reputable. Always confirm that the builder or contractor is properly licensed in the state of Michigan.

Don't Pay in Advance

Consumers should never give a contractor a large sum of money prior to work being done.

"Consumers should never pay for the entire job in advance or before their project is completed," Hilfinger said. "Customarily, pay no more than one third of the total contract price in advance. Homeowners are inviting trouble if they pay the full contract price amount at the start of a job or prior to completion."

Pay in partial payments or installments as different stages are completed, especially on large projects. This way, if the work is not proceeding according to schedule, the payments also are delayed. Pay only by check or credit card, not cash. Before you make that final payment, make sure the job is complete, you have inspected and approved the work, the job site has been cleaned up, and the suppliers and contractors have been paid.

Don't Forget Your Permit.

Before starting a project, check with your local or state building department to determine if your project requires a permit. A permit provides the legal permission to start construction of a building project in accordance with approved drawings and specifications.

"In today's economy, do-it-yourself home improvement projects make financial sense. But it's important for homeowners to remember that even if they do the work themselves, they are responsible for obtaining building permits too," Hilfinger said. "Checking with your local or state building officials ahead of time could save you costly mistakes in the long run."

Other important tips:

- Get three written estimates based on the same work to make meaningful comparisons. Estimates should include detailed job specifications on the materials, labor, timeline, and total charges for the work. Don't automatically choose the lowest bidder.

- Ask for references. Talk to friends, neighbors, or former customers who are familiar with the contractor's work, reliability, and business practices. Ask former customers to see their completed job, if they were satisfied, and if they would use the contractor again.

- Obtain a detailed written contract that states exactly what work will be done, the quality of the materials used, warranties, start and completion dates, total cost of the job, and a payment schedule. It will provide clear expectations for you and the contractor, and help avoid many of the problems experienced by consumers. Make sure you understand all of the terms. If you don't, ask. Never sign a contract with blank spaces. Know your cancellation rights.

- Protect yourself by asking the contractor, subcontractor and suppliers for a completed and signed "waiver of lien" form. This will prevent a subcontractor or material supplier from putting a lien on your home if the contractor doesn't pay the bills. This can happen even if you paid the contract in full.

- Make sure your contractor is insured and carries personal liability, worker's compensation, and property damage coverage. Ask for copies of current insurance certificates. If the contractor is not properly insured, you could be held liable for any injuries and damages that occur during the project.

- Keep good records: copies of the contract, change orders and correspondence.

Preventive Maintenance Protects Your Investment

- Check the roof for any missing or damaged shingles, flashing around the chimney, foundation for any cracks, windows and doors to identify or prevent water damage from heavy spring rains. Check gutters to ensure they are hanging properly and are free of debris. Position downspouts so they drain at least three feet away from the foundation.

- Inspect plumbing and pipes to prevent water damage inside the home. Check around the base of the water heater for evidence of any leaks. Make sure your sump pump is operating properly.

- Inspect the electrical system, fuse or circuit-breaker box for excessive wear or tripped breakers. Make sure each circuit breaker is labeled with the location it serves. Replace batteries as needed in smoke detectors and inspect the gauges in fire extinguisher(s).

- Change the air filters on your heating and cooling systems to clear away the winter dust and ensure you'll have fresh air throughout your home.

- Check your deck for any damaged wood, wobbly railings or stairs.

For more information about the Michigan Department of Licensing and Regulatory Affairs, visit www.michigan.gov/lara.